HomeMy WebLinkAboutAgenda - 02-25-2025; 12-1 - Information Item - Memorandum - FY 2025 Pension Spiking Review 1
ORANGE COUNTY
NORTH CAROLINA
FINANCE and ADMINISTRATIVE SERVICES
Gary Donaldson,CTP, Chief Financial Officer I gdonaldson@orangecountync.gov I PO Box 8181, Hillsborough, NC 272781 919.245.2453
INFORMATION ITEM
To: Board of County Commissioners
From: Gary Donaldson, Chief Financial Officer
Date: February 20, 2025
Re: FY 2025 Pension Spiking Review
During the 2014 General Assembly session, Contribution-Based Benefit Cap legislation was enacted to manage
the practice of"pension spiking," in which a Local Government Employer Retirement System (LGERS) member's
compensation substantially increases, resulting in a monthly retirement benefit that is significantly greater than
the member and employer contributions.
LGERS identified ten County employees that may result in a pension spiking liability. Finance asked LGERS to
assume that all ten members would retire by December 31, 2024, for risk assessment purposes. LGERS
completed the analysis in January and confirmed that there is no actual pension spiking liability for the ten
members identified.
The pension liability results was determined by reviewing each members' Average Final Compensation (AFC)
defined as the last four years of service versus the CBBC threshold of$130,764.73 for 2024 and $134,687.67 for
2025. All 10 members AFC were below the CBBC. The CBBC is adjusted annually for inflation by LGERS.
Finance will request an annual LGERS review prior to the ensuing year budget development to ascertain any
changes in the pension spiking liability and provide the Board and the Manager similar information as herein.
cc: Travis Myren, County Manager
Cait Fenhagen, Interim Deputy Manager
Brenda Bartholomew, Human Resources Director
Kirk Vaughn, Budget Director
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